Dollar General Corp. (NYSE:DG)

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates an overall upward trend from 2019 through 2023, increasing from approximately 1.98 billion to 3.66 billion US dollars. However, in 2024, there is a notable decline to approximately 2.43 billion US dollars, marking a significant reversal after years of consistent growth.

Cost of Capital

The cost of capital shows a slight upward movement from 7.1% in 2019 to a peak of 7.4% in 2022. Following this peak, the cost of capital decreases to 7.11% in 2023 and further reduces to 6.82% in 2024, indicating a trend towards lower capital costs in the most recent years.

Invested Capital

Invested capital steadily increases each year, rising from approximately 18.1 billion US dollars in 2019 to 26.3 billion US dollars in 2024. This continuous expansion represents an ongoing investment in assets or operations over the period analyzed.

Economic Profit

Economic profit experiences robust growth between 2019 and 2023, moving from roughly 696 million US dollars to a peak of about 1.9 billion US dollars. In 2024, however, economic profit sharply declines to approximately 638 million US dollars, mirroring the decrease observed in NOPAT, despite the reduction in the cost of capital.

Summary of Key Insights

The data indicates a general pattern of growth in profitability and invested capital from 2019 to 2023, accompanied by a slight rise and then a decline in cost of capital. The decline in both NOPAT and economic profit in 2024 suggests operational challenges or increased expenses affecting profitability despite favorable capital costs. The continuous increase in invested capital signals ongoing expansion or capital expenditure which may not have immediately translated into proportional returns in the most recent period.

The annual financial data indicates notable fluctuations in the profitability metrics over the presented periods.

Net Income

Net income showed a consistent increase from February 1, 2019, through January 29, 2021, rising from approximately 1.59 billion US dollars to 2.65 billion US dollars. This upward trend indicates improved profitability during these years. However, in the subsequent years, net income declined, falling to about 2.40 billion US dollars by February 3, 2023, and further decreasing to approximately 1.66 billion US dollars by February 2, 2024. This decline in net income suggests challenges impacting profitability in the most recent years analyzed.

Net Operating Profit After Taxes (NOPAT)

NOPAT similarly displayed an upward trajectory from February 1, 2019, through February 3, 2023. It grew from approximately 1.98 billion US dollars in 2019 to a peak of about 3.66 billion US dollars in 2023. This represents significant improvement in operating efficiency and profitability over this time frame. However, in the latest period ending February 2, 2024, NOPAT declined notably to around 2.43 billion US dollars, indicating a reduction in operating profitability despite the previous gains.

Overall, both net income and NOPAT exhibited substantial growth from 2019 through early 2023, reflecting enhanced financial performance and operational effectiveness. Nevertheless, the data for the most recent year reveals a marked decrease in these key profitability indicators, implying emerging issues or external factors affecting the company’s financial returns. Close monitoring and further analysis may be required to understand the drivers behind this downturn and to assess the company's future profitability prospects.

The data reflects trends in the provision for income taxes and cash operating taxes over a six-year period, from February 2019 to February 2024. Both financial items are presented in thousands of US dollars.

Provision for Income Taxes

The provision for income taxes displayed an overall upward trend between 2019 and 2023, beginning at 425,944 thousand US dollars in 2019 and peaking at 700,625 thousand US dollars in 2023. Specifically, the amount increased steadily from 2019 through 2021, reaching a high of 749,330 thousand US dollars in 2021. After this peak, the provision declined to 663,917 thousand US dollars in 2022, then rose slightly in 2023 before substantially decreasing to 458,245 thousand US dollars in 2024. This pattern suggests variability in tax expense recognition possibly influenced by changes in taxable income or tax planning strategies.

Cash Operating Taxes

Cash operating taxes also followed an increasing trend in the initial years, starting at 457,118 thousand US dollars in 2019 and reaching 823,390 thousand US dollars in 2021. This was followed by a decline in 2022 to 660,916 thousand US dollars and continued decreases through 2023 and 2024, reaching 596,198 thousand and 553,172 thousand US dollars respectively. The decline after 2021 indicates a reduction in actual cash outflows related to income taxes, which may correspond to changes in timing differences or tax provisions to cash payments.

Comparative Insights

Notably, cash operating taxes consistently exceed the provision for income taxes through 2021 but then fall below the provision in 2023 and 2024. This shift indicates a divergence between the tax expense recorded under accrual accounting (provision) and the cash paid for taxes, potentially due to deferred tax assets/liabilities or timing differences in tax payments. The peak of cash operating taxes in 2021, which is significantly higher than both preceding and subsequent years, may reflect a one-time tax payment or adjustment.

Overall, both the provision for income taxes and cash operating taxes exhibit peaks around 2021, followed by notable declines, with cash operating taxes showing a sharper descent. The divergence observed in recent years suggests evolving tax payment patterns and provision estimates that warrant closer examination for their implications on the company's tax strategy and cash flow management.

Total Reported Debt & Leases

The total reported debt and leases exhibit a consistent upward trend over the six-year period. Beginning at approximately $11.1 billion in early 2019, the figure increased steadily each year, reaching around $18.1 billion by early 2024. This represents an overall increase of roughly 63% from 2019 to 2024, with notable acceleration in growth between 2021 and 2023.

Shareholders’ Equity

Shareholders’ equity demonstrated moderate fluctuations with a slight downward trend until 2023, followed by a recovery in 2024. Initially valued at about $6.4 billion in 2019, it increased marginally in 2020 before decreasing progressively to a low of approximately $5.5 billion in early 2023. A rebound occurred in the final year to nearly $6.7 billion, almost recovering the equity levels observed at the beginning of the period.

Invested Capital

Invested capital showed a steady increase throughout the entire period. Starting at approximately $18.1 billion in 2019, it rose gradually each year, reaching about $26.3 billion by early 2024. This constitutes an increase of approximately 45% over six years, indicating continued investment and growth in capital base. The increases are consistent and without significant volatility.

Overall Analysis

The company appears to have increased its leverage significantly, as evidenced by the growing total reported debt and leases, which outpaced the growth in shareholders’ equity. Despite a temporary decline in equity through 2023, the final year saw a recovery to prior levels. The consistent rise in invested capital alongside increasing debt suggests an expansion strategy possibly funded by borrowing. The leverage position warrants monitoring due to the growing debt level relative to equity.

The financial data reveals several notable trends regarding economic profit, invested capital, and economic spread ratio over the six-year period from early 2019 to early 2024.

Economic Profit

Economic profit showed an overall upward trajectory from 2019 through 2023, beginning at approximately $696 million and peaking at around $1.9 billion in 2023. This indicates substantial growth in the company's value creation over this timeframe. However, in the most recent year ending February 2024, there was a marked decline to roughly $638 million, representing a significant reduction that may merit further investigation into underlying causes.

Invested Capital

Invested capital steadily increased throughout the entire period, rising from about $18.1 billion in 2019 to $26.3 billion by early 2024. This persistent growth suggests ongoing capital deployment into the business, which could include expansion, asset acquisitions, or other investments to support operational growth and capacity enhancement.

Economic Spread Ratio

The economic spread ratio exhibited variability over the years. Initially, it remained just under 4% in the first two years, then experienced a significant jump to over 7% during the 2021 to 2023 period. This higher ratio implies improved returns relative to the cost of capital during these years. However, in the latest period ending in 2024, the ratio dropped sharply to 2.42%, indicating a decline in profitability on invested capital and potentially signaling pressures on cost efficiency or diminished returns.

In summary, while the company showed robust growth in economic profit and invested capital for most of the observed period, the recent downturn in both economic profit and economic spread ratio suggests emerging challenges in maintaining the previously high returns on investment. This highlights the importance of closely monitoring the company's operational performance and capital efficiency moving forward.

Economic Profit

Economic profit displayed a generally upward trend from 2019 to 2023, starting at 695,868 thousand US dollars and peaking at 1,903,371 thousand US dollars in 2023. However, in 2024, there was a significant decline to 637,878 thousand US dollars, which is below the initial 2019 level.

Net Sales

Net sales showed consistent growth over the entire period, increasing annually from 25,625,043 thousand US dollars in 2019 to 38,691,609 thousand US dollars in 2024. The progression indicates steady expansion in revenue without any decline or stagnation.

Economic Profit Margin

The economic profit margin remained stable around 2.72% in 2019 and 2020, before increasing substantially to 4.68% in 2021 and maintaining a similar level of 4.44% in 2022. It further improved to 5.03% in 2023, representing strong profitability growth in relation to sales. Nevertheless, in 2024, the margin dropped sharply to 1.65%, marking a significant decrease in profitability relative to sales despite the increase in net sales.

Overall Analysis

The data indicates robust revenue growth throughout the period; however, economic profit and profit margins do not consistently mirror this growth. The peak in economic profit and margin around 2023 suggests improved operational efficiency or cost management during that period. The subsequent marked decline in economic profit and margin in 2024, despite continued sales growth, highlights potential challenges related to costs, pricing, or other profitability factors. This divergence warrants further investigation to understand underlying causes impacting financial performance.